Selling an Inherited House in California: Probate, Step-Up in Basis, and the Tax Break Most Heirs Miss

The step-up in basis is the most valuable tax benefit most heirs do not know about. When you inherit a home, the IRS resets the property's cost basis to its fair market value on the date of death — not the original purchase price. If your parents bought their Palmdale home for $120,000 in 2002 and it is worth $460,000 when they pass, your cost basis is $460,000. If you sell for $465,000, your taxable gain is only $5,000 — not the $340,000 gain your parents would have owed. This step-up eliminates decades of appreciation and depreciation from the tax calculation. Know the home's current market value at /en/sell-my-home/#report to understand your tax position.

Probate: The Process and Timeline

Avoiding Probate: Trust vs. Will

If the deceased had a living trust that included the home, probate can be avoided entirely — the successor trustee can sell the home without court involvement, typically within 60–90 days. If there was only a will (or no estate plan), probate is required for any California real estate. Probate takes 6–18 months and costs 4–8% of the estate value in attorney and executor fees. On a $460,000 AV home, that is $18,400–$36,800 in probate costs. If your parents are still alive, helping them establish a living trust ($1,500–$3,000) can save your family tens of thousands of dollars and months of delay.

Multiple Heirs: The Complication Nobody Plans For

When multiple siblings inherit a home, all must agree to sell. One holdout sibling can delay or block the sale. California law allows a partition action — a lawsuit to force the sale — but this costs $10,000–$30,000 in legal fees and takes 6–12 months. The better approach: have an honest family conversation early. Get the home appraised, agree on a selling strategy, and designate one sibling to manage the process with power of attorney from the others. If one sibling wants to keep the home, they can buy out the others' shares at appraised value. We have managed many multi-heir AV sales and can facilitate these conversations neutrally.

Sell As-Is or Fix Up? The Inherited Home Dilemma

Inherited homes are often outdated — original 1990s carpet, aging HVAC, deferred maintenance. The question is whether to invest in repairs or sell as-is. In the AV, the math usually favors light cosmetic updates: $3,000–$8,000 in paint, carpet, and landscaping can yield $15,000–$25,000 in additional sale price. Major renovations (kitchen remodel, bathroom remodel) rarely make sense on inherited properties because the time and complexity delay the sale and the ROI is uncertain. Sell as-is if: the home has significant structural issues, heirs need cash quickly, or heirs live out of state and cannot manage renovations. For more on as-is sales, see /en/blog/sell-house-as-is-california.

Tax Strategy: Timing the Sale

The step-up in basis is calculated as of the date of death. If the home's value is lower on the date of death than when you eventually sell, you may owe capital gains on the difference. In a rising market (like the AV), selling quickly after inheritance minimizes this gap. However, do not rush to sell during grief — the market will be there in 6 months. If the home was the deceased's primary residence and you move in and live there for 2+ years before selling, you may qualify for the $250,000 personal residence exclusion ON TOP of the step-up in basis. Consult a CPA. Get the home's current value at /en/sell-my-home/#report.